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Pentagon Inspector General report further supports a decision to halt a sweetheart deal for Air Force to lease Boeing 767 tankers

April 9, 2004 


The following statement is from Eric Miller, Senior Defense Investigator of the Project On Government Oversight:

A report released today by the Pentagon's Inspector General further supports a decision to halt a sweetheart deal to lease Boeing 767 tankers.

"From the beginning, this has been a tail wagging the dog scenario," Miller said. "The Inspector General's report showed that the specifications for the tankers were tailored to match the contractor's product, and not the Air Force's needs. The investigation also showed that the tanker lease deal is laced with provisions that will remove critical transparency in contracting and other taxpayer protections."

"The Air Force hasn't yet justified the need for the tankers, nor has it provided convincing evidence that it's the best financial deal for the taxpayers."

The Department of Defense Inspector General report documents how the Air Force violated federal contracting rules by:

  • Tailoring the tanker contract so that only Boeing would be able to meet the requirements. By doing so, the Air Force eliminated other companies from being able to compete for the contract, it failed in its duty to procure a tanker that will meet its mission needs. This compromise means that the Pentagon is not buying the best, most useful tanker for our fighting men and women.

  • Attempting to waive vital taxpayer protections including the Truth in Negotiations Act (TINA) and the Cost Accounting Standards (CAS) by labeling the tankers a "commercial" buy. Both TINA and CAS protect the government in cases where a true commercial marketplace that sets fair prices does not exist, particularly in the purchase of military aircraft such as the 767 tankers. Cost Accounting Standards ensure that defense contractors do not use Enron-like accounting gimmicks to cheat the government. The Truth in Negotiations Act creates an even playing field by requiring defense contractors to disclose their costs so that the government can negotiate reasonable prices. The Air Force's illegal use of commercial buying practices for the tanker deal gave Boeing the green light to rip off the government.

POGO has been a leader in exposing Boeing's sweetheart deal starting with its 2002 report "Fill 'Er Up: Back-Door Deal For Boeing Will Leave The Taxpayer on Empty" and early efforts to expose the revolving door case of Darleen Druyun, a key architect of the tanker deal who, after landing a lucrative Boeing job, was fired for her unethical conduct in engineering the deal.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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